The rupee’s losses have deepened in recent days amid escalating tensions between India and Pakistan.

Mumbai: India’s rupee has gone from being the best-performing Asian currency last quarter to the worst this year as rising crude prices and tensions over Kashmir weigh on sentiment.

The currency has slumped 2.4 percent since the end of December, missing the rally in its regional peers on optimism over U.S.-China trade talks. It weakened to 71.515 per dollar Monday, from as strong as 69.23 in early January.

“The risk for the India story, which is keeping the dollar well bid vis-a-vis rupee, is higher oil, followed by Kashmir tensions and the political uncertainty,” said Ashish Vaidya, head of trading at DBS Bank Ltd. in Mumbai. “If the negative factors are sustained, for instance, if the Kashmir situation worsens, the rupee could soon touch 73.”

The rupee’s losses have deepened in recent days amid escalating tensions between India and Pakistan following a terrorist attack by a Pakistan-based group of Islamic extremists in Kashmir last week.

Crude oil has surged more than 20 percent this year as Saudi Arabia and Russia pledged to expand their output cuts and on concern U.S. sanctions against Venezuela and Iran will exacerbate a tightening of supply. –Bloomberg